4G auction draws NT$20bn on first day

LICENSES:：Experts said the bidders were reserved in the opening round of the auction, but the bid total was still more than half of the starting prices for the 270MHz on offer

By Shelley Shan / Staff reporter

Wed, Sep 04, 2013 - Page 4

The first day of bidding for 4G telecom service licenses ended at 4pm yesterday, with frequency blocks in the 1,800MHz spectrum emerging as the most sought-after blocks among the seven bidders.

Based on the auction rules laid out by the National Communications Commission (NCC), 10 rounds of bidding will be conducted each day. The auction will end when the participants stop bidding for any frequency block two rounds in a row.

In total, 270MHz of radio frequencies in the 700MHz, 900MHz and 1,800MHz spectrums are on offer, with each bidding unit consisting of 5MHz. Each participant must bid for a minimum of 10MHz and cannot bid for more than 35MHz — a restriction that applies to upstream and downstream spectrums.

The starting price for the 700MHz spectrum is higher than those for 900MHz and 1,800MHz, as the former is currently not being used by any operator and has superior transmission efficiency compared with the latter two.

Except for the C5 frequency block — which is not being used by any operator at the moment — the remaining frequency blocks in the 900MHz and 1,800MHz spectrums are used by 2G operators.

Results from the first day showed that bidders had placed bids for the A4 frequency block in the 700MHz spectrum, which has 15MHz; the B3 block in 900MHz, which has 10 MHz; and the C1 to C5 blocks in the 1,800MHz spectrum, which have 60MHz.

Bidders have yet to place offers for the 700MHz A1, A2 and A3 blocks, as well as the B1 and B2 blocks in the 900MHz spectrum.

The highest bid was placed on the 700MHz A4 frequency block, topping NT$7.11 billion (US$238.8 million), but the real battle was fought over the 1,800MHz spectrum, with offers made on all five blocks in the frequency.

Currently, the C1 and C3 blocks are run by Far EasTone Telecommunications, the C2 block is operated by Chunghwa Telecom and the C4 block by Taiwan Mobile.

Aside from the three dominant players, other qualified bidders include Ambit Microsystems Corp of the Hon Hai Group and two other management teams backed by Ting Hsin International Group and Shinkong Group.

Industry experts had forecast that Chunghwa Telecom and Far EasTone would raise their stakes to prevent Taiwan Mobile from securing the C5 block, because doing so would give it 25MHz in the 1,800MHz spectrum, greatly accelerating the carrier’s service transmission speed. The bidding for the C5 block ended at about NT$4 billion yesterday, about NT$1 billion higher than the starting price. The block’s auction was also the only one where the bidding price went up in each round.

Market observers said that the bidders appeared to be reserved yesterday, with all observing the rule that the bidding price in each round must be higher than the previous round by 3 to 7 percent.

The total amount of money placed in bids yesterday was NT$20.15 billion, more than half of the total starting prices.

Commenting on the auction’s first day, NCC chief secretary Wong Po-tsung (翁柏宗) said that license-holding telecom carriers and newcomers have different plans that require different frequencies, so they have adopted different bidding strategies.

There is no way to tell how many rounds it will take for the auction to end, he said.

“It appears that most of the bidders are still testing the water at this point,” Wong added.

In other developments, the commission said that the penetration rate of digital cable television is expected to reach 40 percent by the end of the year.

NCC Chairperson Howard Shyr (石世豪) said the penetration rate was about 18 percent in the second half of last year.

That figure rose to about 30 percent in June this year, he said, adding that the penetration rate for digital cable TV services in other counties could reach 100 percent this year as more service operators join digital cable projects.